Retailers in Canada Make Strides in the Ecommerce Channel

B2C ecommerce sales set to rise 14% in 2012

“Online” has come to define the way most consumers in Canada socialize, communicate, bank and research. But when it comes to ecommerce, the online channel hasn’t developed commensurate with the internet appetite in the country, according to a new eMarketer report, “Canada Ecommerce: Vendors Compete and Innovate to Deliver Better Ecommerce Experiences.”

Not surprisingly, it has less to do with appetite than what’s being served. Compared to similarly connected nations, product assortment, payment paths and the number of online operators still trail in Canada’s ecommerce marketplace.

While many retail stalwarts in the country have dabbled in ecommerce, sustained success has been absent. But as large Canada-based retailers have begun to compete with US-based Canadian operators such as Amazon, online offerings have begun to expand, and creative solutions to supply chain difficulties have been implemented.

eMarketer estimates that 13.3 million consumers in Canada ages 14 and up made at least one online purchase in 2011. Modest, single-digit growth in the number of online buyers annually is expected to continue throughout the forecast period. Those buyers will spend a total of $21.45 billion on online purchases this year. Spending will rise by double-digit percentages each year through the end of the forecast period, when outlays will near $35 billion.

The oft-cited lag in ecommerce adoption in Canada is certainly true from a penetration perspective—as the online buyer numbers show—but once engaged, the level of participation is predictably strong from a highly connected public. In terms of the average spending per buyer, Canada will rank behind only the US, UK, Australia and Japan in 2012, outpacing average spend per buyer from G20 peers like Italy, France and Germany.

The lag in ecommerce adoption by a wide base is largely due to a set of inhibiting conditions on the supply side. While consumers in Canada are tech-savvy and embrace new forms of transacting, potential vendors struggle to justify the expense of building out a channel and lack the tools to overcome the challenges. There are not enough low-cost payment options for buyers in Canada and, in addition, Canada’s low population density makes shipping difficult and highly expensive for retailers—and consumers when retailers pass on those costs.

Choice is expanding for online shoppers in Canada, though, and payment systems are maturing to make transacting online easier.

New solutions in delivery are also emerging, including shipping to established retail stores with extra square footage and deploying third parties like Bufferbox, which are innovating to make shipping less painful.

The full report, “Canada Ecommerce: Vendors Compete and Innovate to Deliver Better Ecommerce Experiences,” also answers these key questions:

How does Canada compare to other mature countries in ecommerce adoption?

What barriers are unique to ecommerce adoption in Canada?

What strategies are being used to increase adoption?

What companies in Canada are leading the way?

This report is available to eMarketer corporate subscription clients only. Total Access clients, log in and view the report now.